Energy nexus: Russia and Central Asia

MOSCOW. (Ian Pryde for RIA-Novosti) – Last Thursday, Russia’s President Putin arrived in Astana, the capital of Kazakhstan, for the start of a week-long visit to Central Asia, which will focus on energy.

But the visit is not just about oil and gas.

Electricity generation and transmission and atomic energy were also on the agenda, with Moscow and Astana agreeing to establish an international uranium enrichment center originally proposed in 2006.

Other issues included telecommunications and aerospace, and companies such as MTS, the mobile phone company, as well as KAMAZ, the truck maker, were also among the Russian delegation accompanying Putin.

In Astana, Putin told Kazakh President Nazarbayev he was very happy that cooperation between the regions of Russia and Kazakhstan was developing faster than that at governmental level.

Putin brought a similar message to Ashgabat, telling Turkmen President Gurbanguly Berdymukhammedov that although energy was the main issue, the two countries were strategic partners and there were many other areas where they could cooperate.

Russian Deputy Prime Minister Sergei Naryshkin, for example, said in televised remarks that Russian business would be able to help Ashgabat with financial and management skills to develop the Turkmen economy and benefit both countries.

Russia is also looking to promote cooperation with Central Asia through multilateral organizations such as the Eurasian Economic Community (EurAsEC) and the Shanghai Cooperation Organization (SCO).

The Great Game continues

The main issue for Moscow is control over the export of oil and gas from the landlocked Caspian Basin.

With huge sums and massive political and economic influence at stake, Moscow is keen to be involved in all of the region’s oil and gas export pipelines, which, given the current geopolitical financial and technical situation, pass through Russian territory for the most part.

In this sense, the situation has changed little since the early 1990s.

Energy exports to the south and the Persian Gulf are largely excluded by the situation in Afghanistan and America’s Iran-Libya Sanctions Act (ILSA), which was originally passed in 1996.

Although the part referring to Libya was rescinded following Gadaffi’s renunciation of his nuclear program, the section on Iran remains in force, preventing U.S. firms and inhibiting most international energy majors from investing in the country.

And as Viktor Khristenko, Russia’s Industry and Energy minister, pointed out, the trans-Caspian pipeline along the sea bed originally proposed by the United States in 1996 to reduce Europe’s dependence on Europe – and weaken Russia – would be much more expensive and fraught with many more technical difficulties than the land route around the Caspian.

What has changed under Putin is that Russia is now much more self-confident and that Moscow and the Central Asian countries have become more aware than before that they have a strong vested interest in cooperation.

Russia is far too weak to become a superpower again in the foreseeable future, but it is reasserting itself as a great power based on its huge oil and gas reserves, and is exploiting its geopolitical position as the largest country in Eurasia.

Russia and Central Asia – natural born allies

Central Asia can play a vital role in this regard since it remains one of the few bright spots in Russia’s foreign policy in recent years, in particular when seen against the current lows in relations with the United States and the European Union over energy and Estonia and several other areas – although the “atmospherics” should not detract from the ongoing cooperation between Russia and the U.S. and Europe on many issues.

Central Asia has always felt close to Moscow, even though Turkmenistan and Uzbekistan in particular have had their differences in recent years, including over the gas prices Russia has paid to Ashgabat.

But it was always obvious that Russia would recover economically from its lows in the 1990s and that the Central Asian republics would be most unlikely to antagonize their large neighbor.

In addition, outside observers tend to grossly underestimate the importance of Russian language and culture in Central Asia.

It was no coincidence that while in Turkmenistan Putin stressed the importance of Russian-language education, which Russia has been supporting in Central Asia for years, financing Russian schools and universities in the Kyrgyz Republic since the 1990s, for instance.

And with Russian oil and gas majors such as Gazprom, Rosneft and LUKoil long involved in the Caspian basin, it was hardly surprising that the talks and agreements between Russia, Kazakhstan and Turkmenistan covered joint oil and gas production and oil refining, as well as the all-important transit pipelines.

Moreover, Putin also mentioned that Uzbekistan would also probably be involved in future multilateral cooperation due to its sizeable gas reserves.

Against this background, the United States’ attempt to drive a wedge between Russia and Central Asia since the early 1990s was always unlikely to succeed.

So while Russia has achieved a real breakthrough in securing the agreement of Kazakhstan and Turkmenistan for a pipeline across Russian territory, this result was in fact always on the cards.

Nazarbayev was due to attend the U.S.-backed energy summit at the weekend in Krakow to discuss the trans-Caspian pipeline to circumvent Russia.

Azerbaijan, Georgia, Ukraine and Poland attended the summit, but although Kazakhstan was crucial to this plan, Nazarbayev opted to stay in Astana to see Putin and take part in follow-up meetings on energy with the new Turkmen president.

The way forward

The three presidents agreed to build a new gas pipeline around the Caspian, in part along the existing pipeline, which is to be upgraded.

Nazarbayev was keen to stress that this was a purely pragmatic business decision and had no political aspects, pointing to the improving rail and air connections with Europe as proof.

This bodes well for European energy security since all three countries have a common interest in exporting oil and gas to markets in Europe, as well as to Asia, including India and China.

However, Russia and the West seem to have reverted to a Cold War rhetoric, which is wholly outdated in an age of increasing interdependence, and the “oil and gas wars” have heightened European and U.S. concerns about energy security, forcing Europe to look to alternative energy strategies.

In order to assuage these concerns, Moscow could show the way forward by adopting the kind of friendly tone it employs in Central Asia.

This would, however, entail major changes in Moscow’s current approach to “the West” and is therefore unlikely, even though the benefits to Russia would be enormous.

Russia’s good relations with Central Asia, on the other hand, are based on a mixture of Russian language and culture and pragmatic common interests, which will always give it a huge advantage in the region over any other outside power.

Even so, Kazakhstan and Turkmenistan now see themselves as independent countries and, despite the friendly tones, there will doubtless be hard bargaining behind the scenes about both prices and volumes, not to mention financing the new pipelines.

But as Nazarbayev said, this is likely to be based more on economic self-interest rather than ideology.

The current round of agreements is a major success for Russia, but the politicking around the energy resources of Central Asia is likely to continue, if on a different plane.

Ian Pryde is CEO of Eurasia Strategy & Communications, Moscow.

The opinions expressed in this article are the author’s and do not necessarily represent those of RIA Novosti.

Originally written for Ian Pryde’s weekly column for the Opinion & Analysis section of RIA-Novosti’s English-language website.

Now available at, the site of the Sputnik news agency, the successor to Russian state-owned RIA Novosti’s international branch, which became defunct in 2013.

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