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Energy, Economics, and Security in Central Asia: Russia and Its Rivals

Authored by Dr. Stephen J. Blank. | March 1995

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SUMMARY

Five Central Asian states emerged out of the Soviet Union's Central Asian republics in 1991. Although U.S. policymakers presumed that Iran would inevitably sweep them into its sphere of influence, this has not happened. Nor is it likely to occur. Instead there has developed a multi-state competition for influence and even control of these new states. This competition involves Russia as the leading force in the area and Moscow's main rivals are Turkey, Iran, Pakistan (and India), China, and the United States. This rivalry is particularly strong in the struggle among these states to gain positions of leverage over the energy economy, i.e. production, pipelines, and refining in Central Asia because this region is blessed with enormous energy deposits. These deposits are crucial to Central Asia's integration with the world economy and economic progress. Indeed, energy exports may be the only way these governments can hope for any economic stability and progress in the future.

Therefore, whoever controls the energy economy will determine the destiny of the region. This monograph offers a detailed look at how and why Russia is trying to control that economy and thus the destiny of these states, as well as the strategies of its rivals. Moscow is aiming to reintegrate Central Asia into an economic, political, and ultimately military union with Russia. It is trying to dominate their economies and subject them to Muscovite direction. Russia, therefore, resorts to blocking energy production, hindering foreign firms' activities in Central Asia, obstructing exports, and conducting currency policies that export inflation. Russia also has devised policies that coerce Central Asian states into giving Russians residing there dual citizenship. All of these policies signify Russia's efforts to fashion a new model of economic and, hence, military-political hegemony over the region and a new form of Central Asia's colonial dependency upon Moscow. The monograph argues that though Moscow is conducting a strong policy, it is not ultimately able to achieve such control because Central Asian states have alternatives in other states and because of Russia's own economic weakness.

Presently, none of Russia's other rivals for influence in Central Asia are able alone to check Russia's renewed imperial thrust. Should they combine their efforts, an option that has some limited possibility of fruition, they might achieve something in the way of lasting positions of leverage over Central Asia. But China is likely to be an exception to that general trend. China, arguably, is driven by compelling energy and political needs of keeping its own Muslims docile to expand its economic and political influence into Central Asia. Although for now cooperation with Russia is a greater priority for China, in the longer term there are significant possibilities for China to become Russia's main rival in Central Asia. These conclusions derive from a detailed examination of the role Central Asia plays in the international policies of Turkey, Iran, India-Pakistan, and China. In all these cases, energy and transportation, as well as the Islamic factor, figure prominently in efforts to gain leverage. However, detailed examination of their policies suggests that if Moscow's rivals act alone, except for China, they cannot save Central Asia from Russia.

Implicitly, however, a second factor is operating that will make any Russian effort to reimpose empire difficult. Russia's own economic situation will not permit it to use its economic power to lift up and modernize Central Asia. Rather Central Asia will remain trapped in an inequitable division of labor and backwardness, not to mention authoritarianism, that will not lead to internal stability. Indeed, quite the opposite will be the result if Russian imperial policies prevail. Therefore the monograph argues that the U.S. policy that has essentially accepted Russian policies here is mistaken. If we want to foster conditions of economic growth, democratic progress, and global integration, we should promote policies that open Central Asia to foreign investment and economic growth. We should not consign the region to a Moscow-directed integration that leaves it as the backward raw materials periphery of a stalled Russian economy. That policy can only lead to further instabilities and conflicts in the area which will then increasingly bring all of the rivals into the conflict zone. Such an outcome conforms neither to Central Asia's interests nor to those of the great powers which contend for influence there. In that case regional economic and political rivalry could become an intractable international military rivalry.

Introduction.

Five new states emerged in Central Asia when the Soviet Union collapsed. They are Kazakhstan, Uzbekistan, Kyrygzstan, Turkmenistan, and Tajikistan. Then Secretary of State James Baker and many U.S. pundits expected these largely Muslim republics to fall soon to Iranian or fundamentalist influence. This view stemmed from a superficial wrongheaded reading of the area.1 Instead, a complex, multi-state rivalry to influence and control Central Asia's destiny, trade, and resources, especially Kazakhstan's and Turkmenistan's oil and gas, has developed. The main players are Russia, Iran, Turkey, India, Pakistan, China, and the United States. Israel and Saudi Arabia play a lesser role.2

Russia's sustained effort to subordinate Central Asia to its policies is the most strongly perceived aspect of this rivalry. However, Central Asian states are not helpless before foreign machinations. The earlier view about the imminence of Iranian takeover that U.S. policymakers had postulated has not been borne out by events. Rather, Central Asian states are enhancing their ability to deal freely with Russia's rivals.3 Since Moscow openly employs economic pressure and a coercive energy policy to compel Central Asian reintegration with Russia, those sectors figure most prominently in this rivalry, whose outcome has vital consequences for both regional as well as Russian security.

All the rival states' influence over Central Asia affects important, often vital interests. For example, Israel aimed to divert Central Asian states from pro-Iranian policies, prove its bona fides in the Muslim world, and prevent nuclear proliferation from Kazakhstan to other Muslim states.4 In the future U.S. interests here could become vital if Russia or China enters local conflicts. But to best understand what is now taking place in this rivalry the focus should be on the international struggle over Central Asian energy resources. This struggle takes place in the broader context of the rivals' efforts to influence Central Asia's economic and political global integration. Focusing on the rivals' economic policies, especially in energy,clarifies that context and this rivalry.

Conclusions.

Central Asian states, on their own have, made initiatives for more unity and not submission to Moscow or anyone else.140 The United States should encourage these joint efforts as well as multilateral Western projects to meet regional economic and ecological needs. Inclusion in a Russian bloc inhibits Central Asia from real integration with the global economy at a time when it is not standing still but seeking that integration.

This analysis strongly suggests that Russia is overplaying its hand in Central Asia. Russia can obstruct the Kazakh and Turkmen economies through its energy policies. But it then risks inflaming all of Central Asia's desperate economic-ecological situations and civil strife, such as presently exists in Tadzhikistan. By forcing these states into a subservient backwardness, Russia promotes conditions that virtually guarantee continuing conflicts. Nor can Russia afford to reconstruct Central Asia's economies to prevent future crises. A policy that therefore ignores the region and focuses on Moscow abets its current but misguided policies.

When viewed strategically, Central Asia, because it is marginal to the West and important to the states discussed here, becomes a prime example of how multilateral Western and Russian help could jointly ease tensions in potential future hot spots. Moreover, the threat here is not Islam, as such; political Islam (the idea that the religious authorities and political authorities should be the same or closely connected) has no answer to Muslim civilization's present crisis. Rather political Islam is a cry of despair over the failure of other alternatives. Therefore we should not adopt policies that intensify the chances for Western failure in Central Asia by not offering even a minimum economic program of reconstruction.

Two conclusions flow from this. First, it is in everyone's interest that Moscow and Washington help Central Asian states reach full economic sovereignty and development. U.S. support for Muscovite economic domination of local economies and energy industry through its pipelines sends Moscow the wrong signal regarding Russian imperial proclivities and tempts Moscow into unaffordable engagements. That outcome will profoundly disturb the whole region.

Nor will Russian domination contribute to the flowering of market economics and democracy in these states. Rather that kind of domination integrates them as backward dependencies into a Moscow-centric economic system where Moscow has every reason to continue supporting Central Asian authoritarianism. That makes Central Asia once again a center of instability and the object of strong international rivalries. Since Central Asia is increasingly important to China, Turkey, Iran, Pakistan, and India, a Moscow-oriented policy also weakens possibilities for a broader Asian security system.

The second conclusion follows from this first one. Iran's ability to threaten Moscow's or Washington's vital interests here is steadily declining. Tehran is actually in retreat in the Middle East and faces daunting domestic problems. U.S. policy in Central Asia should not be based on an Iranian threat but rather address real issues like economic reconstruction.141 That is where all foreign efforts should go. The International Monetary Fund (IMF), behind which stands the West, has recommended a single package for Central Asia much like the one it recommended with disastrous results for Russia.142 This will not save Central Asia from an economic catastrophe. Instead, following the IMF plan will lead them into deeper dependence on Russia and shattereconomic-political stability in Central Asia. Rather, it is imperative that the Central Asian states trade freely with whomever they want and sell and ship their oil as they please. In that manner they can avoid undue dependence on any one state.

There are several reasons for this. First, if foreigners are excluded, Central Asians will have to rely on antiquated, backward, and inadequate Russian infrastructure for their energy production, extraction, and transportation that will only further blight the already blasted Central Asian ecology.143 Western and Japanese technology, on the other hand, offers much more ecological promise and is more economical. Second, it is in the West's interests to diversify oil suppliers, adding downward pressure on oil prices and blocking Russian imperial temptations. That policy might move Russia to reform its antiquated and crisis-plagued energy economy rather than trying to avert the needed structural reforms as has been the case until now.144 Only Central Asian revenues and a lack of competition enables Russia's energy industry to carry on its ruinous course and avoid the needed reforms.

By fostering Central Asia's gradual but genuine integration with the West, the United States can help it overcome its problems and adopt rational and beneficial economic policies that create real conditions for the political reforms we seek. One rational step would be for Central Asia to deepen its ties with the ECO despite the former internal Turco-Iranian rivalry there. The ECO offers a Persian Gulf alternative to Russian trading routes. The ECO could help efficiently exchange Iranian refined oil for Central Asia's electricity surplus and local infrastructural improvement. Local manufacturers and producers of consumer goods should benefit from a larger market with greater ability to market their product. And the ECO could usefully discuss regional and transnational cooperation in economics, ecology, and even security.145

Promoting Central Asian regional integration, sustained economic reform, and economic growth meets local needs and interests. Regional cooperation blocks Russian neo-imperialism, diverts Russian energies to more cooperative avenues, and aids Russian democratic reforms. Policies encouraging neo-imperialism in Central Asia help neither Russia, Central Asia, nor the United States. Regional integration also hinders Iran from maximizing anegative influence when the inevitable crisis appears. It also prevents any one power from feeling aggrieved or threatened by local developments since all will benefit. Economic advancement undercuts fundamentalist appeals that are based on modernization's failures to date in the Muslim world. U.S. promotion of regional cooperation strengthens our calls for political reform because we then join with developing indigenous forces who demand reformand a devolution of power. And lastly, promoting such ventures creates a local balance that deters a new great game and rivalry among other states.

Though these are not vital U.S. interests, they are vital for local and adjoining states, none of whom alone can contest Russia's imperial thrust. But that thrust cannot remedy either local conditions or Russia's weakness. Rather, Russia's imperial drive compounds both problems. While Central Asia itself may not be seen to be vital to the United States, the explosion that will ensue if we abandon the region to Moscow will spare nobody from its wrath.

Endnotes

1. Many of these views were based on assumptions made by Paul Goble, the State Department's expert at the time on Soviet nationalities, e.g. Shiite and Sunnis were "pretty much alike." David Hoffman, "Iran's Drive to Rebuild Seen Posing New Challenges to West," The Washington Post, February 2, 1992, p. Al; and A.D. Horne, "U.S. Loses Specialist Fluent in the Nationalities," The Washington Post, January 14, 1992, p. A7.

2. Anoushiravan Ehteshami and Emma C. Murphy, "The Non-Arab Middle East States and the Caucasian/Central Asian Republics: Iran and Israel," International Interactions, Vol. XII, No. 1, April 1994, pp. 95-104; Robert O. Freedman, "Israel and Central Asia: A Preliminary Analysis," Central Asia Monitor, No. 2, 1993, pp. 16-20.

3. Roland Dannreuther, in "Creating New States in Central Asia," Adelphi Papers, No. 288, March 1994, asserts this argument quite forcefully.

4. Ehteshami and Murphy, pp. 95-104; Freedman.

140. Moscow, Nezavisimaya Gazeta, in Russian, July 12, 1994, FBIS-USR-94081, July 28, 1994, p. 5.

141. William E. Odom, "This Time Let's Dispense With the Moral Self-Indulgence," Washington Post Weekly, October 24-30, 1994, p. 23; Laura Drake, "Still Fighting the Last War," Middle East Insight, Vol. X, No. 6, September-October, 1994, p. 41. It is revealing that in an interview in the same issue of this journal, Martin Indyk, the National Security Council official for the Middle East, does not even mention Central Asia in discussing policy towards Iran, "Peace and Containment", Ibid., pp. 30-37.

142. Kiaras Gharabaghi, "Development Strategies for Central Asia in the 1990s: In Search of Alternatives," Third World Quarterly, Vol. XV, No. 1, March 1994, p. 117.

143. Ibid., pp. 112-113.

144. Peter Fuhrman, "What Boris Gives," Forbes, August 15, 1994, pp. 42-43; RFE/RL Daily Report, August 10, 1994, gives evidence of the crisis in Russia's energy industry.

145. Gharabaghi, p. 116.